a pleasant hello. i'm kelly wright. welcome to a brand new hour inside america's news headquarters. >> heather: i'm heather childers. topping the news this hour, new

york police say they now have a suspect in custody in the death of a man who was shoved in front of a speeding subway train. what police say she told them about the incident, including an apparent motive. will she be charged with a hate crime? details ahead. >> kelly: plus, a wounded warrior walking again inside an amazing new medical body suit. you got to see this, that would make ironman proud. >> heather: and 'tis the season to pop some corks and celebrate the new year. "consumer reports" is here with the best tasting sparkling wines that won't leave you starting out 2013 already in debt. >> kelly: good to see you. >> heather: good to see you. >> kelly: first, we begin with the latest developments in an 11th hour scramble to prevent serious tax hikes and spending cuts that would potentially send the u.s. into another recession. we don't want to see that a. right now senate leaders are trying to assemble a last minute tax deal that they hope can pass both chambers of congress. and make it to the president's

desk before monday's midnight deadline. chief congressional correspondent mike emmanuel has more on this. what are the latest on these talks to avoid a fiscal catastrophe? >> the key negotiators have been tight lipped, which may be a good sign talking to one another and not to reporters. senate majority leader harry reid and mitch mcconnell asked president obama and other congressional leaders to give them time to work on a compromise deal, recognizing time is running out. again today, the president emphasized the need for action. >> and congress can prehave not it from happening if they act now. leaders in congress are working on a way to prevent this tax hike on the middle class and i believe we may be able to reach an agreement that can pass both houses in time. >> we are told conversations are taking place. meanwhile, house republicans are due to meet tomorrow evening. it was originally scheduled for monday morning. it's not clear if they'll have the details of a deal, but the

thinking seems to be getting everybody together sooner than later. >> kelly: i remember the president on friday saying that we've got to get this done and president obama, however, you go back to the campaign, had been campaigning on asking upper income americans pay more. how is that likely to play out right now? >> you're right. president obama made the argument that those making more than $250,000 a year should pay more. higher tax rate. john boehner floated a plan that would have kept low rates for those making up to a million dollars. two house members talked to us earlier today about where the tax issue is likely heading. >> the $400,000 level seems to me to be about right. that represents about the top 1% of income earners in the country. we need to save tax hikes on as many americans as we can. i kind of feel like i'm a life guard and we got to save as many people from crown not guilty higher taxes as we can. >> the challenge is finding the right figure to win some republican support in the senate and attract enough votes to pass the house.

kelly. >> kelly: interesting comment right there, feeling like a life guard. many people are wondering if they're going to do that on capitol hill. thanks so much. going to be an interesting new year. watch fox sunday tomorrow. chris wallace talks with lindsey graham and nine fine stein. check your -- diane feinstein. >> heather: new york city police have a woman in custody who they believe killed a man by pushing him in front of an oncoming subway train. they released this video of the suspect fleeing the scene. police say she is 31-year-old erica menendez of the bronks and she made statements incriminating herself. she told them she mated hinn bow dues and muslims. wins say that she was muttering to herself before shoving the victim onto the tracks. he was a 46-year-old man who lived in new york city, but originally from india. however, it's unclear whether he was hindu or muslim. criminal charges are pending

against menendez. but no word if she will be charged with a hate crime. >> kelly: thank you. meanwhile, overseas in france, a court striking down a 75% income tax rate on its richest citizens, saying it's excessive, unfair and unconstitutional. the ruling is a big blow to the president who had promised during his campaign to raise taxes on the wealthy. katherine field is a correspondent for global radio news and joins us live on the phone from paris. thank you for joining us this evening. so what kind of blow is this politically to france's president? >> it's an embarrassing blow to him. he had made this tax rate hike a key platform of his manifesto. he said it would be a tax that would be france's rich helping the nation during harsh economic times. also the fact, this is thrown

out by the constitutional court on a technicality. it was deemed to be not fair because it would be applied to individuals rather than households. so it looked as though the governed had been lobbying how it put the bills together, rushed it through parliament and put it before the constitutional court. is so it made everything look too fast and shabby. kelly. >> kelly: katherine, based on that, does that mean -- will that mean that he can actually resubmit a new law and if so, does this -- today's decision only equal a decision that is a temporary setback? >> indeed. it is a temporary setback. within the last few hours, the government officials have been saying that the law will be redrafted to conform with the court ruling. it will be resubmit to do lawmakers and the chances are that it will be passed again. there has been a lot of uproar at this tax in france, a lot of

wealthy entrepreneurs moved abroad to other countries in the region. today's court decision could see them delaying departures for the time being. they may well still have their suitcases ready in the corner. >> kelly: to your point, i wanted to ask but that because for the wealthy people living in france, those making more than $1.2 million a year, who would incur the 75% tax should it go through once he resubmits it, how have they responded to the proposed tax hike and the -- i understand the french billionaire, who is the chief executive officer of moa, ask louis vitton, filed an application for belgian nationality and an actor looking to flee france should this 75% tax go into effect? >> completely true. the french have always had very uneasy relationship with the richest parts of their society.

they've always considered profits to be something of a negative concept. especially when as you mentioned france's richest man decided to leave france and apply for belgian citizenship am. one of the newspaper headlines at the time had on their front page, get lost. they said this is unfair. you're taxing people who are in the new world who are out there making money, making business, getting the country ticking along. the people on the left, supporters of the president were saying, they can afford it. we can't afford it. other people, like in the middle are saying, the rich will leave and those of us left behind will be picking up the bill. >> kelly: let me ask you, because here in the united states we're going through our own budget battle right now, the fiscal cliff. and the fact that the president wanted to tax the wealthy at a higher rate than what the middle class would get. there is something we might be able to learn from what's going on in france right now?

>> i think the thing to learn at the moment that they've been trying in france is probably second nature to an american. what they're trying to learn in france is that it's not bad news to be an entrepreneur. if you have this entrepreneur spirit, you can do it. but you do have to put things in slowly and to reach out and i think that's where the president of france has lost a lot of ground. he didn't get a lot of people on his side, even though he said that this tax hike would only be for a very small proportion of the population and would only be for two years. but because it was seen to have been rushed through, not properly spelled out, it was difficult. >> kelly: one final question, if i may, what kind of deficit reduction would this tax be able to provide for the people of france, if you incur 75% tax because you just happen to be a multi-millionaire? >> the thing about france is we're not the united states. we don't have that many

multi-millionaires. it was actually really only going to affect 1500 people across the country. so it wasn't going to be very much. it was probably, if you're lucky, at best, $1 million. >> kelly: katherine field, thank you so much for joining us via phone and telling us about the deal in france. thank you. >> heather: back at home, hundreds of firefighters from across the u.s. and canada heading to western new york for second day for the wake and funeral services for these two fallen heros. the two volunteer firefighters were killed in a christmas eve ambush when they responded to a house fire and they were gunned down by 62-year-old william spangler. police also arresting 24-year-old dawn nguyen for illegally purchasing the gun that spangler used in that rampage. now the community of webster is stepping up to make sure that the visiting firefighters have a place to stay. the hampton inn in webster is

expecting between 100 and 150 of those firefighters and thanks to many generous donations, a lot of them will stay at the hotel free of charge. that's certainly very nice of them. local fire departments are also offering a lodging for out of town firefighters. meantime, teachers and students, they are preparing to return to the classroom with memories of the sandy hook tragedy still treasure in their minds. and now more teachers are preparing to fight back if something similar were to happen at their school. a record number of utah faculty attending a seminar to learn to use weapons in the classroom. one teach there are saying that he hopes carrying a gun will act as a deterrent for future attacks. >> i think criminals might hit schools on purpose 'cause they're easy targets. but if they knew teachers were prepared, they would be less likely to go in because it's not just an easy in and out job. >> heather: now more from los

angeles from claudia with the latest on this idea. >> the prospect of tighter gun laws in the new year, some states are looking at not only arming teachers, but they're trying to figure out how to pay for an apparent spike in gun sales. in colorado, for instance, law enforcement officials say they need more money and more manpower to conduct the surge in criminal background checks that are required for gun buyers. they say they're going to ask lawmakers for half a million dollars to speed up the process which used to take about a half hour and now takes a week. the process is free, which has one law maker suggesting those who want a gun pay for the background check themselves. democrat claire levy saying, quote, anyone else, whether it's a teacher or law enforcement officer, anyone else who needs a background check has to pay for it. but the rest of the taxpayers are subsidizing background checks for gun buyers. meantime, inity rut it's already legal to carry a hand gun, school safety experts say teachers should be trained in how to respond to an armed

intruder. >> we are training teachers, actually all school employees, for their application, for their permit to carry a concealed firearm. in utah, they have the unique advantage of being able to carry in schools, we do not restrict law abiding people with a concealed to carry permit from carry not guilty a school. >> hawaii, new hampshire, and oregon also allow teachers with permits to carry on campus. lawmakers in arizona and washington state looking into the idea. such proposals face stiff resistance from gun control advocates, including teachers unions. the american federation of teachers saying, quote, schools must be safe sanctuaries. not armed fortresses. heather, the debate will continue into the new year. >> heather: it certainly will. claudia, thank you. >> kelly: plane crash in russia today leaves four people dead. coming up, did officials fail to enact proper safety measures following a similar incident just days earlier? >> heather: plus, president obama's fiscal back up plan.

should the president really be calling for a more scaled down agreement on the fiscal cliff without waiting to see what lawmakers come up with? we'll have a fair and balanced debate coming up. >> kelly: and countdown to new year's eve. we will have a live look at what goes into putting together one of the world's biggest celebrations. here is anna coy man with a preview. >> officials tested the confetti earlier this morning that will fall from the sky at midnight on monday night. i'll preview the big party here in the big apple and also talk with the late dick clark's wife after this break [ laughter ] smoke? nah, i'm good. ♪ [ male announcer ] every time you say no to a cigarette, you celebrate a little win. nicoderm cq, the patch with time release smart control technology that acts fast and helps control cravings all day long. ♪

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>> kelly: a quick check of the headlines. four people have been killed in a plane crash in russia. investigators say the airline careened off the runway and

caught fire. no word yet on what caused the crash. the windy city reaches a tragic milestone. chicago police say the city has logged its 500th homicide of the year. the latest victim was shot in the head outside a convenience store. former president george h.w. bush's condition continues to improve. a family spokesperson says he has been moved out of intensive care unit, but remains hospitalized for a bronchitis-related issue. >> heather: as lawmakers try to hammer out a budget deal, president obama is also pushing for another more scaled down proposal. in the meantime just in case that doesn't happen. one, that according to many critics would only deal with half the problem. so is this really the best course of action? first, listen to what the president had to say about this during his weekly address. >> leaders in congress are working on a way to prevent this tax hike on the middle class and i believe we may be able to reach an agreement that can pass

both houses in time. but if an agreement isn't reached on time, then i'll urge the senate to hold an up or down vote on a basic package that protects the middle class from an income tax hike, extends vital unemployment insurance for americans looking for a job and lace the ground work for future progress on more economic growth and deficit reduction. >> heather: alexis is the executive director of the american values institute and ford owe continental is chairman of civic forum pac. thank you both for joining us. >> thank you for having us. >> heather: the pledge to work on a new bill is by no means a solution to the sweeping set of tax hikes set to hit january 1 followed by steep spending cuts. lawmakers still have to write the bill. they have opera's something that can pass both chambers. will they get it done. ford? >> i think they can get it done. the question is whether or not house republicans will be able

to really push senate democrats in the right direction with respect to tax. president obama has shown no leadership on this. what they really need to do is minimize the damage from what president obama is trying to push for the higher tax cuts because they're going to need public opinion on their side in the new year to really make entitlement reform because at the end of the day, we're ohm talk being tax. we know $16 trillion in debt. the real problem right now is entitlement spending because at 62 to 65% of the federal budget. we've got this problem ballooning by the hour w. got to do something about it. right now i think house republicans are going to have to take it on the chin and get the deal because we need public opinion on our side. >> heather: alexis, will they get it done? >> i hope so. i think the lack of leadership has been on the house side. speaker boehner couldn't even get his own bill passed. so he's been fumbling the ball. i think what the president is doing with the up or down vote is trying to bring oversight to the american people in the spirit of the holidays, he's trying to let the american

people decide who has been naughty and who has been nice. i think ford is right on one thing, the american people are very, very tired of this. they think congress is to blame and that they need public opinion back on their side. the short-term solutions are going to make a huge difference in people's lives, particularly people who are unemployed. these long-term decisions are not -- >> alexis, my friend, i couldn't disagree with you more. >> heather: speaker boehner -- back to what you said in the beginning, speaker boehner will did have a bill and tid have a plan. ford f there is a reid-mcconnell deal in the senate, it would probable low include an extension of current income tax rates for most americans, measure to block a scheduled expansion of the alternative minimum tax and extension much unemployment benefits, and possibly a measure to prehave not a scheduled cut in medicare payments to doctors. so how will the house respond to any deal in the senate? >> it depends really what mcconnell and reid really broker. if it's something that's a good

deal that we can move to the new year and start looking at structural entitlement reform, then we'll take it. i completely disagree with alexis, by the way. the president is not showing leadership with this deal. what he's trying to do is push the blame on the house republicans and break them. he's not interested in just winning this issue. he's interested in getting his agenda through which includes more regulation, gun control possibly, and immigration reform. all he wants to do is win the blame game. he's not interested in leadership because if he was interested in leadership, he would have brokered from the beginning in good faith and because he just ignores entitlement reform, he's kidding himself. >> heather: alexis, i'll let you respond to that. because when it comes to spending cuts, president obama says his own, his own words, quote, lays the groundwork for that in the future. the last big budget deal in the summer of 2011, it ended with precisely the same promise, which in turn ended in failure and the fiscal crisis facing the country today. why believe him this time? >> the ball is actually not in his court right now.

the ball is in the senate and the house court to come up with a bill that he can sign. so he's trying to set a tone right now about what would be acceptable in the short-term. these long-term issues around entitlements are exactly that, they're long-term issues. to manufacture a decision deadline of 48 hours from now is kind of irresponsible because we're talking about systems that have been around for decades now that many americans depend on. we're talking about systems that are really earned benefits. they're not entitlements. we have paid money into. and we're -- >> we're down to the last minute because the president does not want to deal with the debt. he doesn't want to deal with structural entitlement reform. >> if the president and the house and the senate were serious about dealing with debt, we would be dealing with the cost of monopolies on medical cost. we'd be dealing with -- >> i agree with you. >> with campaign finance and

lobbies driving these costs -- >> heather: let me interject here. >> you're making up an argument. >> heather: the president did offer to deal with the debt last summer, he offered to raise the debt ceiling by closing loopholes and not raising taxes. quote, give us $1.2 trillion in additional revenue which is could be accomplished without hiking tax rates. it could be simply a accomplished by eliminating loopholes. that's what the president said and that's exactly what republicans offered him weeks ago. so why didn't he take that offer, alexis? why the ultimatum and insisting on tax increases and now here we are days before we reach the deadline? >> because republicans lost this election and so the president actually does have a little bit more political capital to spend than the republicans do. john boehner would get a much worse deal than he would have gotten the summer when we were talking when ford and i actually

were on this channel talking about the debt limit. and that is because the right has been captured by antitax interest by grover norquist, by people who won't come to the table and have a reasonable conversation about modest tax increases in relationship to modest cuts in spending where the majority of american people are. and so -- >> alexis, let's be honest. >> because the house is acting like bunch of kids. >> the president is backtracking on his deal because all he's concerned about doing is breaking house republicans on this issue, because he wants to get his agenda through before the 2014 election and he feels the best way to do this is make house republicans and john boehner who is now the least popular congressional leader look like bad guys. it's political heater and not good governance. >> heather: we appreciate you joining us. we'll see what happens. >> thank you. >> kelly: preparations are underway for the new year's eve celebration in times square.

crews are hard at work putting the finishing touches on some old traditions and a few new ones. a special inscription on this year's ball is just one feature that organizers say will make this new year's eve one to remember. anna kooiman live from the fox news channel plaza in manhattan. >> hey there. happy new year! i don't know if you can see that or not. >> kelly: i can see it. >> we're practicing. we have napkins instead of confetti. but new york city is all decked out for the holidays. we have tourists on 6th avenue having great type, taking pictures of the oversized christmas ornaments and the santa claus christmas trees on our plaza here at 1211 avenue of the americas. now it's time for a new year and a new you. we got preparations completely underway. the times square alliance officials tested out the confetti that's going to be falling from the sky on monday night. they threw it out a window on to some unsuspecting people there in the street. more than a million revellers will be packing into times

square to watch the ball drop monday night a. billion more will be watching from home. the 2013 sign is already situated on top of one times square. it's seven feet tall. after four decades of dick clark helping america ring in the new year, 2013 will be the first celebration following his death. a special waterford crystal with his name engraved on it will be in the ball this year. we spoke with his wife, carey clark. >> dick always thought of show business was a business, you know, and new year's eve we come to new york and he did the countdown and always was excited about it. always enthusiastic. not like i said before, he didn't ever think oh, it's just another new year's eve. every new year's eve was special. >> depending who you talk to, 13 can be a lucky number or an unlucky number. some folks are indifferent about it. for all of those out there who are superstitious, no need to fear. the 13 that's going to be dropping on that 2013 on monday

night at midnight actually has some good luck charms attached to it. kelly, back to you. >> kelly: thanks. >> heather: and we are just days away 'til new year's eve as anna just showed us, and make sure you ring it in with us. megyn kelly and bill hemmer will be covering it here. it starts at 11:00 p.m. monday night and you, too, can be part of the show. send us your happy new year's message. it will appear on our ticker crawl at the bottom of the screen live during the show. text u text, one word, space, your greeting, to 36288. then send it to us at 36288. then tune in to see your message and for more on the all american new year's eve special, and a look at the top stories from 2012, go to foxnews.com/aanye.

>> kelly: all right, amazing technology is now paving the way for new treatment of paralysis. a look at the military developed suit that's actually helping spinal cord injury patients get back on their feet. >> you're watching your legs move. >> yes. from time to time i look down just to make sure i'm still positioned right. but i try not to. >> i see you smiling. >> this is one of the biggest boosters. i'm just fortunate enough to be a test pilot [ sniffs ] i have a cold. [ sniffs ] i took dayquil but my nose is still runny. [ male announcer ] truth is, dayquil doesn't treat that. really? [ male announcer ] alka-seltzer plus fights your worst cold symptoms, plus it relieves your runny nose. [ breathes deeply ] awesome. [ male announcer ] yes, it is. that's the cold truth!

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>> kelly: it's the bottom of the hour. time for top of the news. reuters reporting the new york city woman arrested in the fatal pushing of a man in front of an oncoming subway train will be charged with murder and a hate crime. police say 31-year-old erica manumea mendez told them she hates hindus and muslims. 46-year-old man was killed in the attack. he's originally from india, but it's unclear what his religious affiliations were. >> heather: the u.n. envoy for syria warns the civil war could plunge the entire region into chaos as refugees stream into neighboring countries. the envoy meeting with russia's foreign minister today to discuss a peaceful end to the conflict.

>> kelly: and the woman convicted of killing the scarsdale diet doctor has died. jean harris spent 12 years in prison for the killing she was 89. >> heather: if lawmakers fail to strike a deal on the fiscal cliff, you've heard about that fiscal cliff by now -- this year's new year's eve will be a countdown to financial pain for many families all across the country. tax hikes mean nearly all americans will see less money in their paychecks. while the government will have to slash spending across the board with the military taking a hard hit. but economic news for 2013 apparently may be not all bad and some analysts say there are reasons to be optimistic. so let's bring in financial advisor carolyn castleberry. thank you for joining us. we could all use some good news. hopefully you're here to bring that. >> i will try. it doesn't seem like happy new year and fiscal cliff go in the same sentence. >> heather: it really doesn't. you know, we talked about the recession, it began five years

ago, reportedly ended -- reportedly more than three years ago. yet 12 million americans looking for work. families have been drowning in mortgage debt for years on end. why should we feel optimistic about 2013? >> it's interesting, i was talking to some people today and they say the fiscal cliff for them started about five years ago. but all is not gloom and doom with this. you look at some of the economic indicators that are out there and what is positive for our economy, number one is the housing market. we have seen a steady progressive positive indicators on the housing market that things are getting better there. another thing is the debt load. it looks like houses are starting to see a significant impact there as well. when you look at the debt ratio to gdp, it's actually decreased to the 2003 level. that means that more families are saving money. also they're paying a lower interest rate on that debt load.

so that's another good indicator that we can bring you for the new year. >> heather: so back to the fiscal cliff, we have to talk about that. what do families need to be aware of immediately with the fiscal cliff? we mentioned our paychecks in the intro. >> well, if we go sailing over that fiscal cliff and nothing is done, in the next few weeks you could see a smaller paycheck, depending upon how your withholdings are handled. there are so many things you need to look at as far as your income taxes. the lowest income category could be hit the hardest. that 10% tax bracket goes away all together. so the poor insist of the poor could really take a hit. so it's really time to sit down, look at your situation, start planning, don't panic. and hopefully some sort of deal will be worked out in the final hours. >> heather: plan to have a little less money in your pocketbook. what other factors do we need to consider beyond taxes in our paychecks? >> we've talked a lot about long-term capital gains. that's something you need to be aware of.

any sort of gains on dividends is something you'll need to look at in 2013. we've also talked about the alternative minimum tax. you've been hearing about the amt. this is something that came into play in 1969 to make sure that the rich, if you will, played their fair share of taxes. in fact, it's hit the middle class more and more in recent years. and it could hit another 30 million or so americans if nothing is done. the average cost on taxes there could be another $3,000. out of your pocket. so these are the things you need to be aware of. but there are things in your control. it's not just all about taxes. certainly taxes are crucial and vital in your plan, but it's not the only factor. >> heather: so you're a financial advisor. you were talking with a lot of your clients. how are they dealing or how are they responding to the fiscal cliff talks? >> not well. i mean, it really depends on who you talk to.

so many people range from confusion as to what is happening, anger, and some people don't want to deal with it. fiscal cliff, i'll think about that later. i'll think about that in 2013. now is the time to at least be aware of what you may be facing. also for your tax, for example, tax preparers, any cpa's that are out there, they're in sort of a wait and see mode at this time. they can't do a lot until they know what they're dealing with. and, in fact, what congress does and makes its move. so if you're looking forward to having that tax refund on time, if that's money that you look forward to every single year, you might want to plan for something different because there could be delays on the scene. it just depends on what happens. everybody is waiting to see what congress does before they can go through their process. >> heather: hopefully they will do something. thank you. carolyn castleberry. we appreciate you joining us. good friend of kelly. thank you. >> you're welcome.

>> kelly: more than 5 million americans are currently suffering some sort of debilitating paralysis permanently forcing them into a wheelchair. now a new type of robot developed by the military could actually be the key to helping many of them get back on their feet. fox news medical a teamer, dr. mark siegle has the story. >> hi, manny. >> manny was paralyzed in a car accident in 2009. in every sense has dreamed of walking again. now a 48-pound skeleton developed by the military to allow soldiers to carry heavy weights long d bringing manny back to his feet. >> how does it feel? >> feels great: brings a smile to my face, every time i use this. it gets better, as you use it, get more used to it.

hopefully eventually i will be on my own doing this. >> you watching your legs move? >> yes. from time to time i look down just to make sure i'm still positioned right. but i try not to. >> i see smile. >> this is one of the biggest boosters they made. i'm fortunate to be a test pilot. >> rick: this real life ironman uses lithium batteries, computer chips, motors and a hand operated console. the benefits are muscle strength, better circulation. these are being tested at 30 hospitals around the country, including mount sinai medical center in new york city, where we spoke with him. doctors working with this say that progress is now coming from technology rather than the traditional focus on neuro chemical treatments for paralysis. >> technology is going to be the breakthrough that will allow them to be back on their feet, walk about, and perhaps a lot sooner then we will see, also

the biology, research and laboratories across the world. >> they cost up to $140,000. units like this one may one day soon be available and less expensive for paralyzed patients everywhere. in new york, dr. mark siegle, fox news. >> heather: great story there. coming up, president obama pushing congressional leaders to strike a fiscal cliff deal before it's too late. so far, though, neither side have put forward a deal that will pass both houses. so what will it take to get members lined up behind a yes vote, kelly? >> kelly: might be a prayer. >> heather: do you have a plan? >> kelly: how about a prayer. and before you count down to 2013, you may want to break out some champagne and st. sparkling wine. "consumer reports" is here with the best bubbly for your buck with the spark miles card from capital one,

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introducing droid dna by htc. it's not an upgrade to your phone. it's an upgrade to yourself. ♪ ooh baby, can i do for you today? ♪ [ female announcer ] need help keeping your digestive balance? align can help. nly align has bifantis, a patented probiotic that naturally helps maintain your digestive balance. try align to help retain a balanced digestive system. try the #1 gastroenterologist recommended probiotic. align. >> kelly: as many much you know now, there has been plenty of discussion over the inability of lawmakers to strike a deal in the so-called fiscal cliff. what happens if come tomorrow night, they actually do come up with an agreement? and what will it take to really

put their plan into action? susan estridge is here. it's good to see you as always. >> good to see you. happy holidays. >> kelly: thank you. same to you. so here we are, in the last therouxs, full, of trying to do what they couldn't do all yearlong, and that is find a way to avert the fiscal cliff, automatic tax increases for everybody and deep spending cut that will affect the defense department and entitlement programs. what do you think? deal or no deal, and if they do reach a deal, can they get it done? >> well, they've got to reach a deal. this is just ridiculous. it was a point after the election where i actually believed -- i don't know about you -- that they had gotten the message that people wanted two houses, the president and congress, republicans and democrats. the people wanted government to work and for people to work together. there was a very short period of

time when the speaker came back and he's meeting with the president and he said, maybe these children have actually grown up, with all due respect. now here we are. what are we going to do, pray? new year is tuesday? these consequences would be terrible. you've got working people whose paychecks would get eaten into. you got people who would pay higher taxes who can barely afford it now. unemployment benefits running out. this is just not okay for them to be sitting in their separate corners trying to figure out who is going to win and who is going to lose 'cause everybody is going to lose. >> kelly: it is incredulous to sit back and watch what's happening on capitol hill. but of course, there are other dynamics, as you know, involved in this long debate over the fiscal cliff. for example, how will all of this, susan, affect the leadership of house speaker john boehner who has not been able to get a consensus among his fellow democrats in the house and many of them are adamant about not saying yes to any deal that

includes a tax hike, so what are they going to get out of this? >> you know, i'm a democrat. so i should be the last person to feel badly for speaker boehner. but he really is in a tough situation. he thought he had a plan last week. he had to pull it from a vote because he couldn't corral his own party. now you have republicans and democrats meeting in the senate. the democrats have a majority. it's much easier for them to get a deal there. then it's got to go to the house and boehner is in a really awkward position. does he call a vote on a senate bill that is not supported by a majority of republicans and stand there very weakened as he depends on the democratic minority to join with a minority of republicans to pass a bill? nobody is running against him for speaker. but he's obviously been very much weakened and -- i'm sorry.

conservatives outside the party are calling the shots. >> kelly: so he's facing his own cliff, his personal cliff. if you will, the republicans have not -- conservative republicans have not vote ford a tax hike since 1990. what impact will this have on president obama, do you think? >> well, i was only laughing because i'm glad to hear that the former president bush is in much better shape. i think republicans were chasened and you got strong conservative forces on the outside. if the president gets a deal through, which i think he will, it will be viewed as a victory for him. if no deal goes through and we all see our paychecks dwindling and taxes going up, then i think everybody in washington loses. >> kelly: all right. i got to go. happy new year to you. good to see you. >> happy new year to you.

>> kelly: all right. >> heather: coming up, a new year's eve, it's nearly here. if you want to serve some champagne or maybe some sparkling wine that will impress your guests without breaking the bank, then you don't want to miss this. "consumer reports" is here with their look at the test of this year's best bubbly [ malennouncer ] it's tt time of year again. time for citi price rewind. because your daughter really wants that pink castle thing. and you realldon't want to pay more than you have to. he

>> kelly: new year's eve is nearly here. >> heather: almost. >> kelly: almost here. for many when the ball is about to drop, it's time for the corks to pop, but champagne or sparkling wine can quickly bust your party budget. >> heather: so how do you impress your guests like kelly here who is really fussy. >> kelly: yeah right. >> heather: kidding. while getting the most bang for your buck. shop smart magazine put some

brands to the test. nicole is here with the very best. thank you for joining us. >> thanks for having us. it's a pleasure. >> heather: what makes a good sparkling wine? >> a good sparkling wine should taste complex with flavors of toasty and anisey with fruit, appearle and pear. it shouldn't be bitter. it should have a smooth, creamy mouth feel, a little different from what you would get from sellser, which is like prickly bubbles. >> heather: smooth versus prickly. >> kelly: what's the difference between a sparkling wine and a champagne? >> great question. so all champagnes are sparkling wines, but not all sparkling wines are champagnes. a true champagne is from the champagne region of france, like this product here, which is a champagne from france, whereas sparkling wine can come from anywhere in the world. this one is from new mexico. >> heather: in the order of -- you said they're all good.

>> yes. >> heather: these are three of our best bubbly. we don't want to say worst? >> three of our best. this costs $40 from france. this one is crisp, which is wine speak for not too sweet with ripe apple flavors and toasty nose. this pears nicely with rich, heavier appetizer, like soft mushrooms, crab cake, that sort of thing. it's important to pair it nicely. this costs $16 from new mexico. this is a sparkling wine because it's from new mexico. this has nice array of fruit flavors, things like citrus, apple, pear. it's balanced nicely with slightly yeasty notes. this goes nicely with maybe spicy asian food, sushi on new year's eve, or even fruit. and then this is another really good choice, a sparkling wine from california. it also has some ripe fruit flavors, and lighter, toasty notes. this pears nicely with the

veggie platter, goes flies with that, or pasta, or guests if you go out to dinner, this would be a nice bottle. >> heather: what are the price ranges here? >> we have $40. this might be a nice hostess gift if you're going somewhere on new year's eve. this one is $16 and that's $18. >> kelly: i thought it was like dom perignom where it's up over $100. >> these are all nonvintage wines, so they don't have a year on them. so when you buy it, you want to drink it. >> kelly: let's take a toast. >> heather: cheers. >> kelly: a toast to everyone for a new year. get over the budget battle. have a good time. >> heather: happy new year. thank you so much. >> thank you. >> kelly: cheers to you. tiny bubbles. that will do it for us. >> heather: fox report with harris faulkner is up next. we'll have much more on the fiscal cliff talks as they

continue. also much more on the status of president george h.w. bush. >> kelly: we're glad he is doing better and out of intensive care. we'll continue to follow his story and make sure he's doing well. we'll have that and more. >> heather: anna kooiman live in times square as we prepare for, as we were talking about, new year's eve. harris faulkner up next. see you ♪ constipated? yeah. mm. some laxatives like dulcolax can cause cramps. but phillips' caplets don't. they have magnesium. for effective relief of occasional constipation. thanks. [ phillips' lady ] live the regular life. phillips'. till you finish your vegetables.

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